As widely anticipated, the Consumer Financial Protection Bureau (CFPB) issued a Notice of Proposed Rulemaking seeking comments on proposed regulations that would: 1) bar class action waivers; and 2) impose reporting requirements for individual arbitrations pursued pursuant to pre-dispute arbitration agreements (“Proposed Rule”). The Proposed Rule is accompanied by over 350 pages of Supplementary Information in which the CFPB makes it case that class action litigation and CFPB monitoring of individual arbitrations are both “in the public interest” and “for the protection of consumers.”

BACKGROUND -

The Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act) mandated a CFPB study on the use of pre-dispute arbitration clauses in consumer financial products and services, with a report of its findings sent to Congress. The Dodd-Frank Act further authorized the CFPB to prohibit or impose conditions or limitations on the use of arbitration clauses by regulation if the CFPB determined that it would be in the public interest and for the protection of consumers to do so. However, any such regulation must be consistent with the findings of the CFPB’s Study.